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Investing and gambling have plenty of things in common, but the most popular concepts are risk and reward. These are believed to be fundamental to decision-making processes. Effective money management hinges on the ability to balance these two elements so that potential gains justify the risks taken.
Risk refers to the potential for losing something of value, while reward is the potential gain from an investment or bet. The relationship between these two concepts is often quantified using the risk-reward ratio, which is computed by dividing the potential profit (reward) by the potential loss (risks).
As online gambling grows in popularity in different countries, especially with online live casinos in Malaysia, it’s important to use a strategy that assesses the risks and rewards. This can help protect you from losing more than you can afford while optimizing chances for profitability through disciplined bankroll management.
Choosing a Bankroll Size
1. Assess Your Financial Situation
Bad bankroll management can lead to bankruptcy, so it is important to understand your financial situation before setting your sum.
Start by evaluating your overall income and expenses; identify how much money you have left after covering essentials, such as rent, utilities, groceries, and savings. It is important to make sure that your bankroll is balanced with important financial commitments. This leftover amount is what you can consider for entertainment, or in this case, betting, which should be an amount you can afford to lose without feeling any financial strain.
2. Determine Your Betting Goals
Every bettor’s objective is different. If you are primarily betting for fun and entertainment, a smaller bankroll may be appropriate. The focus here is on enjoyment rather than making a profit, so you can choose a modest amount that allows for casual betting.
However, if you aim to make consistent profits or engage in betting as a side hustle or professional endeavour, you will need a larger bankroll. This ensures you have enough capital to withstand the natural fluctuations in betting outcomes and maintain a steady approach. As you wager, a larger bankroll may be necessary for long-term strategies that involve more complex betting systems or higher stakes.
3. Evaluate Your Risk Tolerance
“Risk” isn’t always pleasant to everyone’s ears; there are different comfort levels for each individual, especially when it comes to money. For risk-averse bettors who prefer to minimize risks of potential losses and play it safe, consider starting with a smaller bankroll. This approach allows for more conservative betting strategies and helps protect against significant financial setbacks.
Meanwhile, for bettors willing to take calculated risks for the chance of higher returns, you might opt for a larger bankroll. However, be mindful that this comes with increased volatility and the potential for greater losses.
In the long run, risk tolerance changes, especially as bettors gain more experience in betting, so allow yourself to adjust your bankroll size accordingly.
Structuring Bets Based on Bankroll Size
1. Flat Betting
Flat betting involves wagering the same fixed amount on every bet for a certain time frame. This is typically a small percentage of your bankroll, which can range from 1-5%. With flat betting, bettors can maintain consistency regardless of previous outcomes, making it easier to track performance.
For instance, if your bankroll is $2000, you might choose to bet $20 on each game as your 1%. This can particularly reduce emotional decision-making and simplify tracking, but it can limit profit potential during winning streaks.
2. Kelly Criterion
The Kelly Criterion is an equation used by gamblers and investors to determine the optimal bet size based on your perceived edge over the bookmaker’s odds. In this formula, the fraction of your bankroll to bet is computed by subtracting the product of your decimal odds minus one and the winning probability from the losing probability, then dividing this by the decimal odds minus one.
For example, if you believe a team has a 55% chance of winning with odds of 1.9, the calculation suggests betting 5% of your bankroll. While this method maximizes growth potential when used accurately, it requires precise estimation of possibilities and can lead to large bets that may exceed comfort levels.
To mitigate risks while still leveraging the Kelly Criterion, some bettors opt for fractional Kelly, which involves betting only a portion of the amount suggested by the Kelly Calculation. For instance, if the full calculation suggested betting $100 based on your calculations, you might choose to bet $50 instead. This approach reduces volatility and the risk of ruin.
Read More: How to Properly Use the Kelly Criterion in Betting
3. Session Bankrolls
A popular method used by many gamblers to allocate a bankroll into portions that are risked during sessions is the session bankroll. This strategy involves allocating a specific amount for a session that typically lasts for at least two to three hours, once or twice a day. While the play length may differ from person to person, the bottom line is that the session ends immediately when the session bankroll goes zero.
For example, if you decide to set aside $200 for a night’s betting session, that amount should not be exceeded regardless of wins or losses during that time. And if you lose the entire bankroll for that session, then you have to stop playing. This can encourage discipline and prevent emotional betting, but it may limit overall profit potential if applied too conservatively.
Test Your Bets with CM2Bet
Sports betting opens up a plethora of different outcomes. It helps to explore different strategies every once in a while, so you can decide which ones are better for your bets. With a smart bankroll, testing them out won’t be too risky.
However, make sure that you use a reputable online casino. There are plenty of options for Malaysians looking to gamble, but it’s important to spot which ones are the most trusted online casinos in Malaysia. CM2Bet MY offers betting opportunities for a variety of sports, from Horse Racing and Soccer to Motorsports!
Register here and try your hand at Malaysia’s sports betting scene.
Read More: Beyond the Clock: Tips for Setting Time Limits in Online Gambling Sessions
